So-called stress testing by the central bank showed that in the event of pronounced economic troubles -- in which unemployment shot up to 10 percent and financial conditions worsened -- the nation's 35 biggest financial institutions would still be able to lend to households and businesses as well as distribute dividends, according to the Fed.

However, certain changes in December's sweeping tax overhaul and a harsher hypothetical scenario led to much steeper projected losses than were calculated last year, the central bank said in a statement.